Murphy may buy ethanol plant

Company inquired about tax breaks

The city of Hereford and Deaf Smith County have had talks with Murphy Oil, a petroleum and coal company that Industry Week reported in 2009 to have $27.5 billion in annual revenue. But any deal is in its early stages.

"We're not commenting on that," said Mindy West, vice president and treasurer of Murphy Oil. "We have not concluded any sales agreement."

Who the other party is in that agreement is unclear. On April 24, 2009, the U.S. Bankruptcy Court for the Northern District of Texas-Dallas Division approved a sale of the plant for $25 million in credit, about 12 percent of the plant's construction and outfitting cost, to a group of Panda's lenders. Societe Generale was the lead company at the time in the group of international financial institutions. A spokesman for the company did not return a phone request for comment.

The plant, designed to produce 100 million gallons of ethanol a year, was slated to use manure from the many feedlots in the area to power much of the plant by turning it into a gas to burn to heat boilers. It was nearing completion when disputes started to arise with Panda's general contractor. Then Panda subsidiaries, including Hereford Biofuels, filed for bankruptcy on Jan. 23, 2009.

Murphy discussed the idea of a property tax reduction with the Deaf Smith County Commissioner's Court on Monday.

"They haven't specifically asked for anything, but they were talking about a tax abatement," said County Judge Tom Simons. "They said they'd be back in touch. I expect a proposal or request at that time."

There is still a tax abatement in effect for the property from its Panda days. It started with forgiving 85 percent of the property taxes and gradually got smaller over 10 years, Simons said.

The city renewed an agreement on July 19 that continues a 99-year lease of about 1,300 acres of city water rights around the plant with whoever owns the 380-acre site, said City Manager Rick Hanna.

"The bankruptcy court declared all existing agreements stay in place. This just reaffirms that," he said. "We just did it to appease potential new buyers."

The lease, an economic development tool, does not require payment for use of the water.

Murphy Oil is based in El Dorado, Ark., and operates more than 1,100 retail gasoline locations in the U.S, according to its Web site. Many of the locations are at Wal-Mart Supercenters.

A Murphy subsidiary bought a shuttered 110-million-gallon ethanol plant in North Dakota for $92 million in October to blend the fuel derived from corn with its gasoline, President and CEO David Wood said in a news release.

Murphy is not the only gas company working to supply its own ethanol.

"I don't know if it's a emerging trend per se, but you do see more oil interests getting involved," said Matt Harwig, a spokesman for the Renewable Fuel Association. "Valero is obviously the most known, but Marathon and Sunoco have also bought into production capacity."